Construction Loan Tips

Tip 1: Ensure your Mortgage House lender has answered all your questions regarding the process
for your new Construction Loan and mortgage repayments.
Tip 2: Get a number of quotes from builders and compare them. If there is a large variation
between quotes, ask them to requote with a better price and include more details.
Tip 3: Ask your builder for a list of references and if possible, drive past and see their work.
Ask their past customers how they found the experience and the quality of their work.
Tip 4: Ensure the builder is aware of and able to comply with the 6 month limit to complete construction.
Tip 5: Arrange your insurance covering the full replacement value and ensure the correct First
Mortgagee is listed (your home loan lender will be able to provide this information).
Tip 6: Check your builder has all the necessary qualifications and insurance policies (such as indemnity insurance, public liability insurance and warranty insurance etc) to carry out the construction work.
Tip 7: Provide your builder with the list of details required, by Mortgage House, to appear on their invoice to avoid any delays in payment.


Verify your builder

  • Check they have a valid license and there a no claims against this builder.
  • Your state licensing office will be able to assist you with this, please find relevant links below:


Find a Builder:


Check the builder’s reputation:


Need More Information: Call us on 133 144 or Enquire Online.

How are construction loans different to normal loans?

Construction loans can work a little differently than other mortgages. The main difference with a construction loan is you can stagger the drawdown of your loan, as construction reaches various agreed stages. The main benefit of this is that a bank or lender will only charge you interest for the amount you have paid out to your builder, not the full amount of the loan. You will have 12 months after your construction loan settlement to complete the construction of your home. The loan will then revert back to a standard variable loan. It is important to make sure you get a fixed price contract from the builder if you are going to apply for a construction loan, so getting pre-approval first is always a good idea to give you an indication of your possible price range. As a general rule, a construction loan only covers the costs of building the property, not buying the land. We have other loans you can use to do that.

Where can I compare construction loans?

Comparing home loans can be an important part of finding one that suits your property goals. While being able to compare interest rates and repayment amounts can be useful, being able to see all the details of the loans you are comparing side by side can be invaluable. At Mortgage House you can compare up to five construction loans together at the one time. Whether they are fixed or variable, investment or residential, you can line them up and compare them. As well as the minimum loan size and loan purposes, you can compare all the features, the repayment options and even the fees of each one. That can make choosing a suitable loan even easier, or at the very least help you narrow down your options. You can even enquire about each loan on the spot, and let our expert lenders answer any of your questions.

Can a mortgage calculator help me narrow down my construction loan options?

If you are building a house, you want access to as much information as possible before and during the build. The same goes for mortgages. Before choosing a home loan, make sure you know where to go to find the resources that will help you with your decision making. Mortgage House’s mortgage calculators are a great place to start. We are committed to ensuring you have all the information and resources you want, not just the ones banks and lenders think you need. Our borrowing calculator can give you a great indication of how much you may be able to borrow. All you need to do is make sure the information you have entered in is as accurate as it can be, and we will give you an end figure. While that figure is only an estimate, and the full approvals process still needs to be gone through, it can help you narrow down the search parameters for your new home. We also have mortgage calculators that can help you budget, tell you how much stamp duty you are likely to pay when you buy, and work out how much you might be able to save if you switch loans.

What is a land loan and why do I need one?

If you are building a new home, you can only use a construction loan for the house itself, not the land. For that, you will need another mortgage – a land loan. You will generally have to pay a 10% deposit on a land purchase, with the balance on settlement. You will also have to pay stamp duty on the land, but you won’t have to on the home. It is really important when you are building a home to make sure you have vetted the builder properly. The last thing you want is for a builder to go bust part way through construction, or do a substandard job on what should be your dream home. Before choosing your builder, research their experience and their business, find out how many house and land packages they have sold, and ask for referrals from other clients. Make sure you check their warranty and insurance cover and, finally, check if they offer a fixed-price contract. You don’t want to be hit with any unexpected fees.

What will my loan repayments be?

Finding out how much your loan repayments may be before signing up for a mortgage can make a big difference to which option you choose. By entering in the different loan amounts into our repayments calculator, you can find an amount you are comfortable to pay. This can help you narrow down your property searches. It can also show you exactly how much interest you will pay over the life of your loan, and how much you can save by making extra repayments and paying your loan off sooner.